The Steep Path to a Nuclear Future

In the wake of the meltdown last year at the Fukushima nuclear plant, the viability of nuclear power has been called into question yet again. The Japanese government has closed down all but one of the country’s nuclear plants (though there are plans to start reopening them), and Germany has abandoned a previous decision to keep existing nuclear plants operating. Concern about nuclear power has also increased in the United States, with most opinion polls now showing a majority opposed to further expansion of the industry.

On the other hand, some commentators have been struck by the fact that the disaster did not cause any direct loss of life and that estimates of the adverse health effects of the radioactive releases are very modest. A striking example is English writer George Monbiot. An opponent of nuclear power before Fukushima, Monbiot has switched to the view that nuclear power should be supported as a response to climate change.

Unfortunately, this debate has taken place without much attention to the economics of electricity production. The critical question is whether nuclear power can be a cost-effective alternative as compared to renewables, investments in energy efficiency or even such long shots as carbon capture and storage. A look at the economic cost of the Fukushima meltdown suggests that the path to a nuclear future is steeply uphill.

I’m too busy to referee another fight over nuclear power today, so I’m delaying opening comments here until tomorrow. The TNI post is open to comments there, so that will give everyone a chance to get started straight away.

Aside from the heebie jeebies the Fukushima disaster is already affecting Australia since Japan is paying very high prices for LNG imports. If domestic gas users in Australia eventually have to match those prices it will make gas fired baseload too expensive by about a factor of four as an alternative to coal. Germany like Japan has opted to switch off several nuclear plants but 2011 emissions remain static since increased coal and gas burning was luckily offset by lower domestic gas use from a mild winter. Note as of last year the Germans have spent $110bn on feed-in tariffs to barely nudge 20% renewables penetration including older hydro. It is not yet clear if they can actually reduce emissions without a recession.

Germany brings into question claims that wind and solar can make nontrivial cuts in coal use. Nuclear agnostics like UNSW’s Ted Trainer say the required investment in new renewables is unaffordable.http://www.energybulletin.net/stories/2012-04-26/can-renewable-energy-sustain-consumer-societies-save-friday
Trainer suggests we resign ourselves to a massive powerdown. Some renewable advocates instead suggest storage of intermittent output and burning biomass for backup rather than gas. For example solar thermal with heat banks to run boilers at night topped up by burning hay during rainy weeks. So far the prototypes are small with high average costs. We await gigawatt scale systems without gas backup that can produce electricity no more than double the coal fired electricity price.

My response to those who imagine reactors abandoned for centuries must be to ask whether we will still have a coherent society in future. If it goes Mad Max then there is no future to speak of. In my opinion Gillard should convene an expert panel to look at nuclear options for Australia w.r.t. legislation, site and technologies such as modular vs. large, cooling options etc. Since this exercise has been done before without result this time make it so the recommendations lead to a firm decision by Cabinet.

I don’t give Ted Trainer much credibility, I’m afraid. As far as I know, he has no background in economics or any relevant discipline – his academic position is in social work. In a long correspondence with him some years back, I concluded that he starts with his desired conclusion then presents the arguments to reach it. To be fair, his estimated cost for a renewables based solution is now much lower than it was. In fact, he now concludes that an annual investment of 11 per cent of world GDP would be needed, which is obviously feasible. Admittedly, it would be difficult politically to reach this point, but since his recommendations are totally outside the realms of political possibility, this isn’t an argument he can rely on.

Looking back at our 2008 correspondence, his model used as an “optimistic” estimate for solar PV in 2050 a cost of $5/installed watt. I suggested that $5 was already in sight and $2 would be more reasonable for 2050. In fact, utility scale costs were at $3/watt in mid-2011, and have certainly fallen since then, so I was far too pessimistic – we will reach $2/watt installed in the next few years, not in 2050.

The other major form of government intervention is loan guarantees, not as big here as in the US. The most notable default was solar firm Solyndra whereas no nuclear guarantees have defaulted to my knowledge.

In Australia nuclear power is prohibited by the ARPANS Act with I presume separate legislation enabling Lucas Heights. If a power generating nuke proposal was on the table then several new pieces of Commonwealth legislation might be required.

Have you spoken with Barry Brook or read any of his work over at Brave New Climate (http://bravenewclimate.com/)? He is pretty rigorous and open minded in his costings of renewables versus nuclear .

Quoted from the site:
“Brook is employed at the University of Adelaide’s Environment Institute, where he holds the Sir Hubert Wilkins Chair of Climate Change in the School of Earth and Environmental Sciences and is also a member of the Center for Energy Technology. He has published three books, over 200 refereed scientific papers, is a highly cited researcher, and regularly writes popular articles for the media and public policy documents.”

Unfortunately, much of the material on his site, particularly on renewables is written by Peter Lang, who’s shown himself to be both innumerate and dishonest. This is related to the fact that he’s a rightwing AGW denier, but his dishonesty and general nastiness goes well beyond what’s implied by that. Barry shows very poor judgement in publishing his material.

Last year Germany installed point of use solar at an average cost of $2.60 a watt. As there is no reason why Australia can’t install solar at that price, both are high labour cost countries, and there is still plenty of room for further cost reductions, nuclear power is economically impossible in Australia.

Just how much solar capacity we will have with a installed cost of $2.60 a watt or the $1 a watt I am sure we will get to before too long, I don’t know. But on sunny days of low demand solar power will push the price of electricity down towards zero. Also, as a price taker with zero fuel cost, solar power, like wind, reduces the wholesale price of electricity. Both of these effects are disasterous for the economics of nuclear plants which need both high wholesale prices and to operate at close to full capacity to hope to make money. Nuclear power could not compete when Australia was mostly coal and gas powered, and it certainly will not be able to compete now that the price of solar has dropped so low. And if nuclear has to pay the market rate for insurance, well, what can I say? Pushing nuclear in Australia is flogging a dead parrot. It’s shuffled off its Tesla coil. It’s a deceased power source.

With ‘solar too cheap to meter’ you might ask whether this an arm’s length arrangement. The energy retailers have to take all the surplus PV or else they will be charged a shortfall fee of 6.5c per kwh by the renewable energy regulator ORER. That’s on top of the carbon tax advantage that solar already has. If they had their druthers resellers may not take any household PV as it is too fickle. In cloudy Germany resellers want the right to curtail excess PV during bursts of sunshine as it requires gas plant to be throttled back faster than is optimal. I believe German power prices are higher than any equivalent Australian price.

Hermit, here in Adelaide our 100 or so megawatts of solar capacity is spread over hundreds of square kilometres. Can you describe how Adelaide’s solar power capacity could experience a burst of sunshine, besides from at the end of a total solar eclipse?

Sam, cost per installed watt is straight forward. But when someone gives cost per kilowatt-hour I have to stop and determine what assumptions have been made. For example, if I wanted to make solar power sound cheap I could give the marginal cost of solar power per kilowatt-hour, which is zero cents as currently sunshine is free. But if I wanted to make it sound expensive I would include the cost of the pixie souls that are vapourised during the silicon purification process, which pushes the cost up to millions of gold crowns per kilowatt-hour. (The exact cost depends on the amount of souless pixie isotopes used in the process.)

We could ask a couple of pertinent questions about residential PV
1) how come sunny places like India aren’t going for it?
2) how much could the grid rely on it if it cost $0 per watt?
If an alternative power source (say hamsters on treadmills working night and day) could keep power bills down for millions of people, then the public funding given to residential PV would be seen as an expensive fad. A couple of years back the Productivity Commission calculated that CO2 saving by residential PV cost $400 per tonne. We’d like it to be under $23 so the incentives are immediate to displace daytime coal power.

Apart from efficiency there is the fairness question of others paying higher power bills so PV owners can cut theirs. In the US I’ve seen a suggestion that non-beneficiaries pay a third of the cost of PV via capital help and subsidies. If we are to cut coal dependence an all weathers night and day power source will have to be found.

Hermit, you are typing into the wrong reality again. Use our internet to look up solar power in India in our reality and see what’s happening there.

A couple of interesting things about solar power in India:

Poor, off grid, rural Indians are starting to use small, pay as you go, solar power systems for lights and mobile phone charging. This is cheaper, more convenient, and safer and healthier than the kerosene lighting they used to use. They get a solar panel and battery and for a fee they unlock it with their mobile phone when they want to use it. Eventually they pay it off and can use the system for free.

India has gotten the price of grid connected solar power down to about 14 cents a kilowatt-hour. While still not competitive with other grid connected electricity sources, despite it being load following, this is a very impressive feat and not one I would have expected to be reached at this point.

The relative cheapness of coal generated energy is somewhat offset by the cost of the grid. Recent rises in cost of electricity in Australia have been put down to much needed investment in grid infrastructure. This is one area of advantage for solar in places like India, which doesn’t have much in the way of a grid.

Hermit, you asked how much could the grid rely on residential PV if it cost $0 per watt. The answer is, it could and would rely on it a lot. Basically, if it was free, all our electricity during the daytime would come from solar power. Since it costs nothing it could be installed wherever it is convenient for the grid and we could install surplus capacity to cope with cloudy days that would connect itself to the grid as needed when it receives a signal over the internet. Our existing, non-solar generating capacity would be used to meet demand at night, although since electricity during the daytime would be basically free we might start investing in energy storage. So the grid would rely on solar energy during the daytime, although the existing fossil fuel capacity could be brought online if it was needed for some reason.

So, can you tell me how Adelaide’s solar capacity could experience a burst of sunshine?

John Quiggin :
I’ve had some limited discussions with Barry Brook.
Unfortunately, much of the material on his site, particularly on renewables is written by Peter Lang, who’s shown himself to be both innumerate and dishonest. This is related to the fact that he’s a rightwing AGW denier, but his dishonesty and general nastiness goes well beyond what’s implied by that. Barry shows very poor judgement in publishing his material.

I don’t believe that’s a fair characterisation, and it doesn’t answer the question.

(Though I agree about the Peter Lang stuff).

Also, isn’t the idea of solar being very cheap in terms of $/watt all well and good, but the critical thing is, it lacks storage for the times when the sun doesn’t shine. And the sun most certainly doesn’t shine, across large parts of the country, for significant periods, often for more than twelve hours at a time.

Reportedly, the $/watt of the best solar thermal plants isn’t nearly as pretty.

I find it analogous to coal fired power with/without CCS. Without CCS, there’s nothing cheaper than coal. Add a magic not yet proven and quite expensive technology and away we go.

@Ronald Brak
The reason you shouldn’t compare by cost per installed watt is that the different technologies have vastly different capacity factors. Unless you take this into account, $/watt is very misleading.

When you’re considering the merits of future investment of any particular technology, you also shouldn’t use marginal cost per kilowatt hour. The null cost of generating one more kilowatt hour from the sun comes only after a large(ish) initial investment in the PV array. To discount the initial investment required is to miss something important.

The appropriate measure to use here is average cost per kilowatt hour. This is higher for solar than for other technologies, but has seen a very steep decline in the last few years.

For people visiting from other realities I’ll give an update on South Australian wind power:

In 2011 South Australia received 26% of its electricity from wind power. The cost of integrating wind power was about 1.4 cents per kilowatt-hour it produced, but as a price taker it reduced the average wholesale cost of electricity by at least half a cent, resulting in an overall gain for consumers. South Australia began to construct a significant amount of wind capacity in 2005 and since then has increased electricity use while decreasing the use of coal and gas and reducing electricity imports. Carbon emissions have been cut 15%. As a result of wind, and to much smaller extent solar, South Australia is shutting down its oldest coal power plant permanently, and will operate its remaining coal plant for only the six hottest months of the year. So, there is absolutely no question that wind can result in very significant, large reductions in coal and natural gas use.

Sam, you mean you don’t you walk around with a table of insolation values in your head ready to plug into cost per installed watt to work out daily and thus yearly outputs for a solar system depending on its location? You know, sometimes I really wonder just what’s going on inside the heads of normal people.

And one can’t just look at the cost per kilowatt-hour for solar. It needs an extra piece of information to make sense and that is whether it is point of use or grid. Grid solar power that sells electricity directly to the grid competes with wholesale electricity prices which will soon be something like seven cents a kilowatt-hour during the day, while point of use solar power competes with retail electricity prices which are often over 25 cents a kilowatt-hour. As solar is quite easy to use point of use while pretty much everything else isn’t, just looking at the cost per kilowatt-hour can make for misleading comparisons.

And as I said, if you give the cost per kilowatt-hour I am going to want to know the assumptions. Too many calculations, such as ones on Barry’s site, are full of fetid dingo kidneys. So by all means give the cost per kilowatt-hour, but also give the information you used to determine it so we can guage its fetid dingo kidney content for ourselves.

Good on you, Ronald Brack. Thanks for the the news from SA. I’ve just had to turn off the psuedo news, the new ABC24, and put on a video because the “real” news is just too far fetched and shallowly focussed to be believeable for thinking people.

And you get first use rights for your solar “point of use” reference. The element that is missing though is that, from my observations those people who have installed significant rooftop solar capacity display a new understanding of energy efficiency and regulate their energy consumption to fit within their domestic energy production. This energy self regulation trend is under researched and definitely under reported.

If you agree with me on Peter Lang, in what sense do you think I’m being unfair? According to the listing on Barry’s site, Lang is the primary author of articles on renewables. He’s followed by Ted Trainer, discussed above, and then an American nuclear advocate called Blees, whom I haven’t read, but who doesn’t look any more credible than the other two at a first glance

To clarify on cost/watt, I quoted those numbers not as the basis of a comparison with coal or nuclear, but to point out that Trainer’s assumptions were way off the mark. Trainer used cost per watt, so that’s what I quoted the evidence on.

To transform $/watt into c/kwh, you basically need an estimate of the number of peak-equivalent hours per year (2000 or so under favorable conditions), and a percentage cost of capital, including depreciation (10 per cent would be a reasonable starting point) and an allowance for operational costs. With the given parameters, $2/watt=$2000/Kw translates to 10c/Kwh+operational costs. Note that this is a generation cost, for utility-scale projects you have to add transmission, distribution and retail, which will typically be at least as much again, but are the same for other sources.

I’ve picked these numbers to give round and easily remembered answers, so I’m not going to respond to quibbles.

@Ronald Brak
Agreed. Yet another complication is the extent to which solar is load following. In Australia peak electricity use occurs at peak PV generation, so point-of-use PV really reduces the peak strain on the grid.

In England, peak electricity use comes on cold, grey afternoons in winter, when PV is negligible. In this case, rooftop PV is delivering energy to the grid only when it costs very little. Under existing arrangements, electricity costs the same to the consumer all the time, which means users at times of low demand subsidize users at high demand. The PV owner gets to opt out of this arrangement, avoiding the artificially high price at times of low demand (by using their own array), and exploiting the artificially low price (offered by the grid) at times of high demand.

To sum up; In Australia, the fact that solar only has to compete with retail electricity and not wholesale represents a real saving to the system as a whole. In England, it’s just an implicit subsidy to PV owners. It just exploits an arbitrage opportunity presented by an artificially constant price (to consumers) of electricity.

Of course, the answer to both situations is real time electricity pricing. This would make clear the highly profitable nature of Australian rooftop PV, and the comparatively much poorer prospects for the English.

I find much of the argument on cost something of a red herring. As far as I can tell, power in Australia is relatively cheap to users (excluding of course the costs of damaging the biosphere and the exposure to price shock risk associated with resopurce price volatility and depletion). If the end use cost of electricity to users was three times what it is now, personally, I wouldn’t much care. So speaking purely personally, if solar or wind or geothermal or any other renewable or sustainable technology (and here I include nuclear power) can get under this price point, I don’t see a serious problem. And if you ask me whether I’d be happy to make a straight swap of all coal and gas for nuclear power, I’d say yes without hesitation. Nuclear power is technologically capable of doing the job that coal and gas do within the grid at a tiny fraction of the ecological footprint of either of those. As far as I’m concerned, it costs whatever it costs and we ought to just pay up. If we did, our emissions from stationary electricity would fall to zero in a very short time, and we’d also be doing our bit for reducing ocean acidification. The air around current coal and gas plants would be cleaner.

Of course, politically, that’s simply not feasible, and I am amongst other things, supportive of the majority of people getting their way even when what they want isn’t entirely reasonable, provided nothing dreadful follows from giving them what they want. If people want to go 100% renewable and wear whatever costs are associated with complete decarbonisation of the grid, I see no reason why they shouldn’t have it, even if it does turn out to be a lot more expensive than resort to nuclear power. People are entitled to decide how they’d like to spend their money. My concern has always been that when faced with the reality of the costs of such a roll out, the fossil hydrocarbon folks would scare the living daylights out of the citizenry and make that the case for business-as-usual. One only has to look at the way they’ve made $23tCO2e seem like the end of life as we know it to see that. Whatever course we take, we must decarbonise the grid — and our transport system too, and find ways of producing all the many other things we need to on a low emissions base. Time is short. We just need to get this done.

The fundamental constraint here is political. The regime we have seems likely to fall in a little over a year from now. The replacement regime is not going to be even remotely interested in renewables and has sworn to remove the carbon price as well. They probably won’t get away with that but things do look troubling. If we’d committed to build about 25GW of nuclear power between now and 2030, the colour of the regime would be moot. We’d be locked into a low carbon future. It seems perverse to me that those interested in that end and who know how politics works in this country are opposing a way of ensuring we get there which can’t be white-anted by the fossil fuel lobby.

Sam, what with all the heat waves England has suffered from I was wondering if winter was still a time of clear peak demand, but looking into it, I see that the high cost of oil and gas has resulted in lots of UKians installing electric heat pumps to warm their domiciles (and their homes too), increasing winter demand. I also found out that the retail price of daytime electricity is something like 16 cents a kilowatt-hour. So if the UK can install PV at the same price as Germany did last year, and looking up UK insolation in my head I get an average of about 3 kilowatt-hours per square metre for a fixed panel, that means a point of use PV system will give a return of about 6.7%. That’s pretty lousy. I won’t even get out of bed in the morning for 6.7% and that’s not even including the cost of the system eventually wearing out and needing to be replaced. Mind you, the UK has shoot itself in the economic gonads so effectively maybe a 6.7% return on a 30 year investment doesn’t seem so bad over there. Anyway, I think the cost of PV will have to drop even lower before it takes off in Britain, and I’m quite confident it will drop. If solar’s 7% a year decrease in cost is maintained those whacky Germans will be installing it for under a $1.30 a watt in eight year’s time. But in the meantime, when the cold wind blows, the Brits can take comfort from the fact that their wind turbines will help keep them warm.

Fran, South Australia has demonstrated that wind is a inexpensive way of reducing carbon emissions and the massive decline in PV prices means that point of use solar is also cost effective in sunny Australia. So there’s no need to worry that decarbonizing the electricity sector will cost a huge amount of money compared to doing nothing. However, I am concerned that certain people will act to delay the introduction of low emission generating capacity and/or make it more expensive than it needs to be.

If Australia were to be foolish enough to instal 25 Gw of Nuclear generation capacity half of those would be white elepants within a decade and half of the balance abandonded within the next 10 years. And the reason is that people have a choice now.

Take your view that electricity up to 60 cents per unit is an acceptable imposition, let it be 40cents which is more likely, then a household with 4kw of capacity on their roof would be saving $1760 per year in offset energy costs, even with a basic system. No feed in tariffs, just straight personal consumption. That is a lot of money into any family budget. Further, it gives the viability to perhaps double that capacity and increase the savings to $3500 per year, and then to add some storage. $350 per month are the payments on an $18,000 dollar car over 5 years, so as payment on a home energy system, that is quite a respectable system system which once paid for provides a very significant improvement in the standard of living for a family.

It is the same incentive level for business. Now that the self generated power, “point of use” as Ronald Brak phrased it, genie is out of the bottle, nothing is going to be able to stuff it back in. Solar power is going to continue to grow at an ever increasing rate. In the not too distant future an essential factor in real estate values will be the amount of installed solar capacity for average houses and factories.

So with that realisation Nuclear Power systems will be very much the completely wrong grid system in which to invest. Of course there will still be the need for 4 or 5 gigawatt of continuous background capacity which would keep some of the nuclear plants operating once in place. The question would be which ones and where, and it that very question that poisons the choice for an initial startup Nuclear Facility.

That is why I do not believe that Nuclear will never arrive in Australia unless some bullish political party forces a plant into reality simply to make a point. The Electricty Generation industry has a lot of technologies to choose from, at much lower per item cost than a Nuclear Plant, and that range is even greater if the retail price is 40 cents per unit.

@Fran Barlow
Fran, I must say you appear to be arguing from false premises. You say,

“If people want to go 100% renewable and wear whatever costs are associated with complete decarbonisation of the grid, I see no reason why they shouldn’t have it, even if it does turn out to be a lot more expensive than resort to nuclear power.”

The real world just doesn’t look like this anymore. Maybe it did 10 years ago when your views on this stuff formed, but it doesn’t now. In Australia, nuclear just isn’t going to be cheaper than PV and wind, it would be more expensive, which is why it isn’t going to happen.

Fran refers to “renewable or sustainable technology (and here I include nuclear power).”

Nuclear (fission) power on planet earth is not renewable nor is it sustainable.

“A renewable resource is a natural resource with the ability of being replaced through biological or natural processes and replenished with the passage of time. …
…
Solar radiation, tides, winds, geothermal, biomass and other natural elements are renewable resources of energy now called renewable energies.

Gasoline, coal, natural gas, diesel and other commodities derived from fossil fuels, as well as minerals like copper and others, are non-renewable resources without a sustainable yield.” – Wikipedia.

Uranium, thorium and other possible nuclear fission fuels fall under the “minerals” definition and as such are in finite supply on planet earth. There can be no significant renewal of the accessible fission fuel endowment on the crust of the planet outside the highly implausible and totally apocalyptic collision of a large uranium / thorium endowed meteor or comet with earth or the equally implausible and apocalyptic eruption of uranium rich material from the earth’s deep crust/outer mantle.

All renewable resources and energy sources on earth depend on incoming solar radiation except for geothermal energy which depends on the large latent heat and radioactivity of the core of our planet. As such “renewable” means renewable while the long term exogenous (to the biospehere) energy source remains operative.

It is important to get the scientific facts and definitions right.

Also cost is always the issue with power as with the acquisition of any resource. Costs are not only financial. The most important costs by far are the real physical, chemical and biological costs and thus in total the biosphere system costs as damage and even irreparable damage.

<blockquoteSouth Australia has demonstrated that wind is a inexpensive way of reducing carbon emissions and the massive decline in PV prices means that point of use solar is also cost effective in sunny Australia.

As the Howard Cosell head in Futurama might say: fabulous if true. SA also has geothermal reserves and if they can make these work, that’s also great. When the last coal and gas plants close there we can declare victory.

@bilb said:

If Australia were to be foolish enough to instal 25 Gw of Nuclear generation capacity half of those would be white elephants within a decade and half of the balance abandonded within the next 10 years.

It’s a lovely thought, but utterly improbable. Similar things are being said of the NBN.

let it be 40cents which is more likely, then a household with 4kw of capacity on their roof would be saving $1760 per year in offset energy costs, even with a basic system.

That might push down energy costs in the early afternoon, but it’s hard to see how they could put a dent in consumption much after about 4PM. You’ve also got to deliver all that output to places where plants are operating.

@rog said:

Fran, saying that cost is a red herring is just such a cop out – cost is the argument

Not really. Nobody outside the left asks about the cost of the defence forces. It’s sacrosanct. In Australia, geothermal may well be the best non-nuclear option that can do the job now being done by coal and gas but that doesn’t seem likely to be cheap. CSP with storage isn’t going to be cheap either. If you massively invest in storage technology then renewables (intermittents mostly) become fully despatchable but at significant cost, one way or the other. As I said, that doesn’t bother me. All I care about is getting fossil hydrocarbons out of the system as quickly as possible.

@Ikonoclast said:

A renewable resource is a natural resource with the ability of being replaced through biological or natural processes and replenished with the passage of time

While nuclear is not technically ‘renewable’ it is arguably ‘sustainable’. It is likely (according to Mackay) that with FBRs the supply of known nuclear fuel might last 1000 years. Well before humanity reached that point, it might well have found some other way of extracting low carbon energy from the biosphere.

The most important costs by far are the real physical, chemical and biological costs and thus in total the biosphere system costs as damage and even irreparable damage.

I certainly agree with that. So the question is — how do we minimise the human footprint in a world that is unlikely to choose to reduce its demand for energy-intensive service?

Fran, you wrote “Fabulous if true.” You know, you can go and look these things up. Would you like me to give you a link to an AEMO South Australian Supply and Demand Outlook report? It only has data up to March last year, but I think the AEMO would be considered a reliable source. Anyway, here it is:

I’d be careful to give SA as an example of successful energy policy since it has very high power prices by world standardshttp://www.adelaidenow.com.au/news/south-australia/power-prices-to-be-highest-in-the-world/story-e6frea83-1226305741810
While 26% of SA’s megawatt hours are from wind another 44% are from gas. A mix of gas generation technologies gives the flexibility to smooth the fluctuations in intermittent sources. The Torrens Island baseload plant is Australia’s biggest gas user. As pointed out SA’s developed coal deposits are dwindling fast but so are gas reserves in the Cooper and Otway basins.

SA does of course have the world’s largest uranium deposit at Olympic Dam which is hamstrung for future development by lack of power and water. If gas supplies cannot be maintained for SA the stakes are huge; power for Adelaide itself, balancing of wind and solar and the development of the State’s best economic prospect. In dry years SA will depend heavily on desalination. Nuclear with flexible load following capability could fill the energy gap nicely.

Fran, you cannot hide from the reality that personal Solar Electricity generation is both effective and increasingly more popular. This DIYEG improves the living standard of participants and reduces the demand for the grid generators and distributors. This is what is happening in parts of Europe which do not have anything like Australia’s insolation. So where Europe urges the Solar industry forward with subsidies Australia is removing subsidies and yet the industry continues. So as Australia’s better insolation partially compensates for Europe’s subsidies. But as the local grid energy price grows (driven by grid industry opportunism, not a Carbon Price), the compelling argument for roof top solar continues to grow. A thirty year period is sufficient time for 50% or more of Australia’s electricity to come from owner consumers.

This will make a mess of the grid electricity system if the power companies have invested in the wrong kind of infrastructure. The economics of personal power generation are reasonable now. As electricity retail prices increase they will become compelling. Parallel to this, as you are aware, is the certainty that the price of oil based products will steadily rise through the next 20 years. This will put pressure on families for their transport costs as well as on all products that use oil for their manufacture. Where families and businesses can employ electricity for their personal transport, this will become an important and compelling pressure to further invest in rooftop solar, for both business and domestic. These issues cannot be treated in isolation from one another. Energy is energy regardless of the form it arrives in.

So over the next twenty years most households are facing a $60,000 investment in rooftop solar electricity and water heating as well as for an electric commuter vehicle. That might sound like a lot of money until you calculate how much familes already spend on vehicles and energy. The fact is that over the same period families wil save as much as they spend times two by making the investment.

Decarbonising our energy environment will be an accidental consequence over the next thirty years as these commercial forces play out.

Jim Rose :
is atomic power viable without regulator protections against tort liability?

I notice that no one has attempted to answer Jim Rose’s key question.

To hand wave this question away by pointing to other instances of government indemnification won’t do.

The sheer scale of the indemnification of the nuclear industry may well be on the scale of accepting the economic costs of damages arising from losing a major war. Few regimes emerge intact from the consequences of such a loss.

I think that following Fukushima all of those considerations will be back to the drawing board and think it out from scratch, especially in Australia where there are minimal regulations for Nuclear Power Production. I doubt that regulations in place for our Nuclear Research facilities will contain much that would be relevent.

If the simple act of climbing a ladder has a OH&S cloud over it or every power lead on a building site requires monthly inspections, then the regulations for building and operating a Nuclear Power facility is going to need a mountain of Public Safety regulation.

Hermit, why wouldn’t South Australia be a good example for the rest of Australia when, once the higher wholesale price of electricity caused by the lack of cheap coal is accounted for, we pay about the same or less than most Australians do for electricity? This means our distribution is just as messed up as everyone else’s.

Oh, wait a minute, are you suggesting that electricity is expensive in South Australia because of wind? Oh dear, I’ve already covered this. If you look up a little you’ll see I gave the cost of integrating wind energy into South Australia’s grid and how much wind lowered electricity prices and pointed that consumers came out ahead. You see, the reason why South Australia has a lot of wind power is because we have no good coal deposits. This makes the wholesale price of electricity in South Australia higher than in states with coal. And the higher wholesale price makes wind power more profitable. If you were going to build a wind turbine, would you put it Queensland where you could sell the electricity for about 4 cents a kilowatt-hour, or would you put it in South Australia where you could sell the electricity for about 7.5 cents a kilowatt-hour?

And there’s no need to worry about South Australia’s coal running out. While according to the AEMO we did only have 14 years of lignite left, we’ve just recently increased that to over 30 years, as we are closing down one coal power plant and only running the other one during the hottest six months of the year.

And also, South Australia isn’t about to run out of gas any time soon. There is a very long pipe that brings in gas from other states. Also, South Australia has taken the step of reducing gas use by using wind power, and solar power too. Gas and coal use have declined over the past few years while electricity consumption has gone up.

Oh, and Hermit, wholesale electricity prices are about 7.5 cents a kilowatt-hour here, and will be maybe 8 or so cents after the carbon price is introduced, so no one’s going to build a nuclear reactor here.

By the way, Hermit, you haven’t gotten back to me about how Adelaide’s solar capacity could experience a burst of sunshine. Are you going to back up what you wrote or is it something we don’t have to worry about?

In case you’re asking I’ve spent $20k on PV but I find I make greater use of other forms of renewable energy. My conclusion is that PV is a middle class fad not a serious source of electricity absent subsidies.

I f the Chinese can ship Coal from NSW and Qld for electricity generation then so can South Australia. I doubt that there is a problem with backup energy for Renewables in Australia, unless we let the likes of Clive Palmer to flog the lot so that he can squander the proceeds building replica ships.

Fortunately there is no realistic stituation in which South Australia will want to import coal. While I said we have over a thirty year supply, the fact is it’s really an infinite supply as it’s not going to be very long before we mostly give up on coal as lignite is not competitive. Once we start getting about five percent of our electricity from solar we’ll see it having a significant effect on lowing daytime electricity prices and between the high cost of coal here and the carbon price it will only make sense to use coal for peak power. It only took seven years to go from an insignificant amount of wind to getting 26% of our electricity from it, and I think we’ve started a roughly similar expansion of solar power. We might keep the remaining coal plant as a peak plant for a long time, or we might not. It all depends on the cost of keeping it operating and what happens to wholesale prices. My guess is that it will probably be shut down for good before too long, but that’s just a guess.

Hermit, Germany only gets something like 5% of its electricity from solar. This is enough to have a noticable effect on daytime electricity prices, but they are a long way from curtailing it or exporting it at bargain prices.

As a resident of South Australia, I haven’t yet received my air conditioner rationing card. I think rather than rationing, they’re actually pushing efficiency here, so we can get the same amount of cooling for less electricity.

You may have concluded that PV is a middle class fad and not a serious source of electricity absent subsidies, but that doesn’t change the fact that at the moment for many Australians point of use solar is the cheapest source of electricity without subsidies. Installations are currently being done for under $4 a watt. That means that provided one’s discount rate isn’t too high, point of use solar is cheaper than electricity from the grid before any subsidy is received. As we have a feed in tariff that lets people sell point of use solar to the grid for three quarters of what they will charge your neighbour 5 metres away to use it, we are doomed to experience a continued rapid expansion of solar power here in South Australia.

I’m not sure that energy retailers actually want to take surplus residential PV. It’s more a case that they are forced to via the small scale technology certificates (STC) mechanism. I understand a review of the renewable energy target is coming up requested by the retailers. Garnaut, the Productivity Commission and ACCC have also suggested a RET on top of the carbon tax is double dipping. I’d have no problems with PV if there were no feed-in tariffs (paid in part by battlers) and the owner of the wires could decide how much they want to take, perhaps charging an integration fee as done in the US with wind power.

However the big issue is what can substantially replace coal for that 40-60% of peak demand called ‘base load’. PV doesn’t suit that role. Generators are now reluctant to build either coal or gas fired baseload plants due to future cost unknowns, both carbon tax and raw fuel cost. Even when Prime Minister Abbott temporarily repeals the carbon tax those doubts will remain. Therefore we seem locked into an energy death spiral whereby coal plants won’t be replaced and expensive gas takes over their role while renewable energy costs are out of proportion to their contribution.

Actually, since they currently crank the coal plants up and down depending on the wind and demand, they’re not really baseload at the moment either. But if people want to call them baseload, I don’t mind.

“However the big issue is what can substantially replace coal for that 40-60% of peak demand called ‘base load’.”

This is backwards, as I’ve pointed out many times. The only reason late-night consumption is anywhere near 40 per cent of peak is that it is priced far below peak, so as to do something with the electricity generated by inflexible sources like coal. It’s baseload supply, not baseload demand. Get rid of the off-peak tariffs and you’re well on the way to solving the “baseload” problem.

Most people in the blogosphere confuse “baseload” with “despatchable” and contrast this with “intermittent”. I wrote a post on this here some time back. Our fossil thermal plants are highly despatchable. Hydro even more so, even though hydro is not technically “baseload” since you’d be nuts using it to meet typical demand.

@Fran Coal plants generally aren’t considered dispatchable, since they are hard to ramp up and down, at least when compared to gas and hydro. That’s why I describe them as baseload supply and note again that, under current circumstances, the concept of baseload demand is meaningless.

They are hard to ramp up and down quickly, which makes them a lot less dispatchable than, say, open cycle gas plants, but on more than about 4 hours’ notice one can ramp them up and down to meet a given level of demand. Given the presence of a multiplicity of coal plants even a slow ramp up can make a rapid difference to available output.

I don’t agree the concept of baseload is “meaningless” — it just doesn’t mean what most people think it means. What users of power want to know is whether they can predict with confidence that adequate power will be available whether they want it or not at some indeterminate time in the medium term future.

One can’t know for certain that in two weeks’ time that the output of some combination of solar thermal or wind or wave power plants will meet or exceed demand but one can predict with high confidence that the suite of fossil thermal plants (coal and gas) plus hydro could be configured to meet it. In the case of most renewables, the extent of a relevant ecosystem service is a fundamental constraint. Resort to storage can mitigate some of this — or all of it if one is willing to scale up the storage and the size of the plant (and typically the area over which the system operates). Self-evidently though, this assumes very significant redundancy — much more than is the case in fossil thermal systems.

I seem to recall that you agreed some years ago (please correct me if I have this wrong) that about 75% of demand could reliably be covered at low cost by renewables. If so this does seem to imply that the concept of dispatchability/availability has some meaning in terms of meeting typical (i.e. baseload) demand.

To say ‘baseload’ is irrelevant is like saying we can go without food four days a week. Possibly true but not a happy state of affairs. Some heavy industry like aluminium smelting thrives on round the clock operation. At least off-peak pricing of baseload power has a 24-hour predictable cycle and can be used for loads such as water heating prior to the 7 am rush. With wind and solar there can be extended lulls such as a blocking high pressure system with little wind and low cloud. Dispatchable generation has to be kicked in to cover that lull which means otherwise underutilised plants kept on standby. To help Germany a few months back an oil fired plant in Austria had to be cold started.

The problem with fossil backup is it may get expensive with or without carbon taxes. For example the Japanese have been paying $15 a gigajoule for Australian LNG whereas our power stations don’t want to pay more than $4 for piped gas. When gas is prohibitive perhaps as early as 2030 some way will have to be found for storing gigawatt-hours of energy with minor losses. The energy storage problem applies equally well to baseload plant as well as intermittent. There may be other workarounds, for example a nuke design that prefers a steady load could do desalination when not producing electricity for the general grid.

At the time I am looking at it, it runs from about 0400 one day to 0400 the next day. The salient features are;

(1) a large “peak” plateau that runs from 0800 to 2000. This plateau is remarkably flat-ish all things considered.

(2) A marked and steady drop-off from 2000 to 0000.

(3) A small low plateau from 0000 to 0400.

(4) A marked and steady rise from 0400 to 0800.

(5) The difference between the low plateau and the high plateau is not as marked as it appeara because the base of the vertical scale is set to 22,000 and not zero.

In fact, the ratio between “baseload” and “peak load” is about a little under 32,000 to a little above 42,000 on average. (I presume these are megawatts?). This is about a ratio of 3 to 4. Furthermore, the peak is not a peak anyway but a long plateau.

The definition of baseload is as follows. “Baseload (also base load, or baseload demand) is the minimum amount of power that a utility or distribution company must make available to its customers, or the amount of power required to meet minimum demands based on reasonable expectations of customer requirements. Baseload values typically vary from hour to hour in most commercial and industrial areas.”- Wikipedia.

The last sentence is important, namely; “Baseload values typically vary from hour to hour in most commercial and industrial areas.” Some commentators seem to think, erroneously, that baseload is the minimum base needed over 24 hours. Often commentators warn about the “baseload” capacity needed when they really mean the large overall gross electrical generation capacity needed to run a modern economy.

The presumption is – whatever the definition of baseload, erroneous or otherwise – that renewable energy cannot supply this electrical “baseload”. This presumption is demonstrably wrong on all counts. A combination of wind, solar, tidal, hydroelectric, geothermal and bio-fuels will be able to provide this power. After questioning this issue myself and investigating it, I found the answer was in the affirmative, I have provided the broad numbers and references on this blog several times. Opponents of this finding almost always ignore the quantified proofs which is an intersting phenomenon in itself.

Provision of electrical power to modern civilisaztion at current requirements will not be a problem. However, the provision of transport, construction and agricultural fuels and carbon or hydrocarbon based chemical feedstocks will be a problem at least until the private automobile is phased out and maybe even after that. Provision of food, potable water and irrigation water supplies will also be a problem without stabilising and even somewhat reducing world population.

In the above post, I did not specifically address the variability of much renewable generation and the effect of this on baseload requirements properly defined. In short, too much is made of this variability problem. A wide, distributed, integrated and mixed renewable generation system will address these problems along with energy “stores”. It is incorrect to suggest that it is beyond current scientifc and engineering ingenuity to devise and provide energy store systems to smooth supply to demand.

Two important energy effective stores already in use are hydro-electric (pumping water up hill to a resevoir for later hydroelectric generation) and the creation of ice or cooled glycol at night (with excess power) for daytime cooling purposes. This latter can happen at the local site (large building for example) where this daytime cooling/airconditioning is required. Large heat stores for local heating requirements can also be created with excess power. The point of some of these solutions is that all excess energy storage does not have to be of a form that can be easily re-converted to electrical power but can be in the form of heat or a heat differential that is directly useful.

Just found some information on the cost of installing point of use solar power in Australia last month. Prices were as low as $2.50 a watt with an average of around $3 to $3.50. That’s before any subsidy and after GST. Not quite as good as Germany yet, but getting there. At these prices for most Australians it is cheaper to use point of use solar than the grid. This will result in a continued rapid expansion of solar capacity and a reduction in coal and gas use.

And I’ll mention that at these low installation prices it becomes worthwhile to place some panels facing west or north west to maintain electrical production during the late afternoon. This would be particularly true for someone paying spot prices for electricity.

With wind and solar (thermal or PV) the issue is less to do with capital cost now that other technologies are getting expensive. The issue is how to save enough gigawatt hours of energy for when it is most needed at a reasonable time averaged cost.

Hermit, your suggestion of using a nuke to provide peak power is not going to be funded as it is too expensive compared to other options. Currently I can buy an electric car battery pack for about $650 a kilowatt-hour which I could use to store electricity which I could use to store electricity for something like ten cents a kilowatt-hour. This is less than the cost of electricity from new nuclear.

Note there are cheaper forms of energy storage than car battery packs, this is just a clear simple example. Actually, now that I think about it, since there is a $200 a year connection fee here and and point of use solar is now something like 10 cents a kilowatt-hour cheaper than buying from the grid, a lot of light users of electricity might be better off going off grid. This would be a shame as almost all of them would be producing some surplus electricity that would be going to waste. The charges for simply being connected to the grid might need to be abolished to stop people dropping off grid.

since all up I get charged about 31 cents a kilowatt-hour and point of use solar in Adelaide is now something like 17 cents a kilowatt-hour, a lot of people might find they are better off going off grid.

Now that I think about it some more, with the rapidly decreasing cost of solar PV combined with smart meter technology and the slowly decreasing cost of energy storage, it might make sense to pay to remove parts of rural Australia from the grid. Something like 40% of the cost of electricity in Australia is supposed to be a result of battling the tryanny of distance. Perhaps a strategic withdrawal is called for.

I think Barry is just suffering from sports. You pick a team and you throw all your support behind it, come hell or high water. The other day on the internet I saw someone who had chosen Concentrating Solar Power as their team. According to him (and yeah, I’m willing to bet it was a him) every other power source was rubbish. He wasn’t interested in honest economic comparisons and it was the solution to every problem. While his heart was in the right place, I think his brain was located somewhere inside his pelvic cavity.

Some people near me are off grid with tracking PV and a battery bank. My understanding is at night they watch LCD screen devices with a wood stove for heat. One of them confided ‘I’m getting too old for this sh*t’ and welcomed the day nuclear power would enable them to grid connect to cheap reliable power. So if the trend is for millions of homes to go off-grid there will be a few early mutineers. I do kinda like the idea of dynamiting all those ugly transmission pylons.

NB: Haven’t gorgotten about that wind document — will get back to you on this

You pick a team and you throw all your support behind it, come hell or high water. The other day on the internet I saw someone who had chosen Concentrating Solar Power as their team. According to him (and yeah, I’m willing to bet it was a him) every other power source was rubbish.

Sounds like BZE

I don’t agree it’s “like sports” though. Sure there may be some tribalism in there somewhere, but there’s no obvious reason for people to pick one ‘team’ over the other. I see it as rather a second order effect of something far more common in human usage: the tendency when faced with an apparently intractable and serious problem to invest one’s hopes in a panacea or silver bullet. Complexity and delay is painful and silver bullets offer the promise of rapid gratification. Most of us are predisposed to hope they exist and to be a little too credulous when a candidate appears, especially if the silver bullet fits nicely with the rest of our cultural paradigm.

That’s true not merely of technology but in public policy, culture and large areas of our interpersonal lives. There’s a widespread belief that everyone, somewhere, someplace has a ‘soulmate’. This seems utterly improbable, and even if it were true, spending one’s life in search of that person would be about as sensible as putting your life on hold until you win lotto. Worried about the challenge of radical Islam? Nuke Mecca! Worried about asylum seekers? Turn back the boats/Nauru! Worried about crime? Build more prisons; have longer gaol sentences; the death penalty! Worried about s*xual predators? Megan’s Law! Drugs? Ban them! Threats from {fill in currently dangerous country} — Spend billions on defence! It’s not only RW fruitcakes who think this way of course.

And so it goes. Once all problems can be reduced to something amenable to a simple answer, all rival solutions become “diversions” from the real solution which, inexplicably, other people are ignoring. Every now and again, one hears the duality that lies behind this objection — the sense from the objector that the cause is hopeless and the associated desire to buttress the walls and cling tightly to their own righteousness, seeking out any evidence they can to make them feel safe. They want a solution and they want it now, and if they can’t have one, they just want a safe place to abide in so that they can regard the question as settled.

I used to suffer from quite a bit of this. I suspect we all do, though most of us retain the if it looks to good to be true, it probably is objection. Occasionally, there are simple, ubiquitous and effective solutions to problems, but usually, solutions are partial and problematic and generate new challenges.

I used to be very keen on pumped hydro — seeing it as the key to unlocking the potential of renewables, especially wind and wave. These days, I’m not so sure. Yet I think I chose that, rather than nuclear at the time, not out of any real analysis attaching to nuclear power but rather because it fit my own paradigm — which was that nuclear power was bound up with nuclear weapons, the military, and purveyors of industrial waste.

CSP ticks a lot of boxes for many. Prima facie, it seems able to answer the intermittency objection. I used to be quite keen on it for this very reason, though now I’m more doubtful, at least if one constrains for cost. (Spending $37bn per year for ten years is a bit like arguing for an NBN every year for ten years, or an ADF budget every 8 months in addition to the one we have.)

Nevertheless, it’s easier to have in public ownership than rooftop PV and easier to scale up and probably would have a longer service life and be easier to upgrade. Many of those allied with BZE are on the relatively far left and so you can see why this appeals. They are also concerned as any lobby group is that a multiplicity of messages means fragmentation and the persistence of BAU — hence the strident tone.

Whatever the cause, Fran, there certainly seems to be a lot of strident tones around and it can result in silly things like me being viewed as some sort of an enemy because I don’t agree that Concentrating Solar Power cures cancer or destroys body odour.

Pumped hydro does have some problems here, what with Australia basically being god’s ironing board and normally dry as a bone. (Which is a bit of an odd expression as I can assure you that currently my bones are quite moist.) But there is still some room for some fresh water hydro and pumped storage in Australia, and I guess sea water pumped storage is an option as well. There are also other options – usually small scale – such as towed storage where railway cars are dragged up and rolled down tracks on long steep slopes or where something similar is done with a disused mineshaft. And this trick can make use of depths that are underwater. For example, a weight could be lowered into a flooded mineshaft or the ocean. But I don’t know anything about the economics of towed storage, just the concept.

I think that thermal concentrating solar power could be quite useful, once we get rid of that annoying, more expensive than PV, solar part and use electrical resistance to heat the molten salts instead of sunshine. While thermal storage is only about half as efficient as pumped storage, if the capital costs are low enough that isn’t a problem. If low demand and bright sunshine and/or strong wind have a habit of dropping electricity prices down towards zero, then the lower efficiency doesn’t really matter.

Hermit, we’re all blessed when it comes to electric car battery prices. They dropped to $658 a kilowatt-hour this quarter. I did assume that their rate of degregation would be constant.

Oh, and you should explain to your friends that nuclear power won’t help them as it is actually quite expensive compared to current wholesale prices in Australia. That’s why we don’t have any here. And they might want to consider moving to Hong Kong. Electricity is pretty cheap there because tight packing makes for low distribution costs and there are no woodstoves to be seen.

If low demand and bright sunshine and/or strong wind have a habit of dropping electricity prices down towards zero, then the lower efficiency doesn’t really matter.

Unless of course the total output remains inadequate. At high efficiency you need less ecosystem input to meet demand than at low efficiency, so you might be tempted to respond with more capacity and more storage — pushing up costs.

Let’s take 30c /kWh as the cost of battery storage, and say 15c /kWh for the solar PV used to generate it during the day. If you store 1/2 the electricity you generate, that comes in at an average cost of 30c/kWh, dearer than the typical grid price, but in the same ballpark, and almost certainly far cheaper than the combination of nuclear generation + grid costs.

Fran, total output doesn’t affect if energy storage is built. All that matters is there being a big enough difference between what the storers pay for energy and what they can sell it for. If it is enough to be profitable, then it will be done. If renewable energy pushes down electricity prices at some times while the carbon price pushes it up at other times, it might make energy storage a money maker, although improvements in technology might also be required. And of course energy storage relies on being cheaper than burning natural gas and then removing the CO2 released through photosyntheis. (Remind me to ask Craig Venter how long the cellulose excreting algae are going to take.)

The type of energy storage use will probably be the cheapest. Ideally any negative environmental externalities of energy storage would be accounted for and priced appropriately, although if there is a situation where thermal storage system is just making use of PV on people’s roofs that would be there to meet peak demand anyway, I don’t see much in the way of negative externalities there.

I suppose the other unknown here is the volume of surplus output available to be stored. If the efficiency of some renewable source is low, then the surplus above demand might be modest. If the round trip efficiency of storage is low, then the amount available for load balancing will be further reduced.

If you want to guarantee supply, then you need to be sure that it will almost never be the case that the combination of renewables + stored energy will be unable to avoid brownouts. To guarantee that you are going to need more renewable capacity than if either harvest or storage was more efficient.

At the margins, it’s probably going to be cheaper just to have more open cycle gas. You obviously can’t just have too many plants lying about unused so those that are redundant had better be cheap and ready to go. In practice, you probably have to have them in continuous operation if they are in private hands or pay them not to operate.

Bear in mind also that the price for stored power may well be largely the off-peak rate — narrowing the margins for storage.

Fran Barlow :@Ronald Brak
At the margins, it’s probably going to be cheaper just to have more open cycle gas. You obviously can’t just have too many plants lying about unused so those that are redundant had better be cheap and ready to go. In practice, you probably have to have them in continuous operation if they are in private hands or pay them not to operate.
Bear in mind also that the price for stored power may well be largely the off-peak rate — narrowing the margins for storage.

In the case of both gas and storage, if we price appropriately, they’ll either be financially viable or they won’t be needed. Unless you actually run one of these outfits, you shouldn’t really care which of these is true. We shouldn’t need any “pay them not to operate” nonsense – just pay them $100 per kwh for a few hours a year. Better still, expose the consumer to these real price fluctuations and watch the peak demand problem disappear.

@Hermit
I think you care too much about batteries. Most people are connected to the grid in Australia. Grid tie-in solar systems are about half the cost as off-grid ones and you get the best of both worlds. All the reliability of the grid, and a fairly cheap, mostly renewable electricity system.

What’s more, these people greatly contribute to grid stability by supplying clean energy right when it’s most needed, at peak times.

I understand the expression ‘inflexible sources’ to refer to a production technology that is not representable by a smooth supply schedule everywhere such that cost minimisation corresponds to a fixed minumum output at all times.

I understand ‘off-peak tariffs’ to refer to a time dependent price at which the minimum output can be sold.

Suppose an ‘inflexible source’ (eg coal) is replaced by a ‘flexible source’ (eg gas) then the price for the time period now categorised as ‘off-peak’ may be different from the ‘off-peak tariff’ from an ‘inflexible source’.

So the relevant conceptual framework involves technology, preferences, prices, and the profit motive.

Fran suggests people want to live in the expectation that electricity supply is available whenever they want it even if they don’t consume it at all times. This suggestion is credible from the perspective of each and every individual. However, decisions based on the aggretation of these expectations could result in a socially wasteful supply of electricity. As the data provided by Ikonoclast as well as Prof Q’s reference to off-peak tariffs’ indicate, ‘the market’ aggregates the actual consumption behaviour of electricity for given production technologies.

@Sam
Nobody has asked the electricity retailers whether grid tied PV suits their business model. They are compelled to do it by the RET. Drop the RET and subsidies (now called STCs) and see what happens. Retailers might tell PV owners ‘use it or lose it’. They do get some clawback with the daily connection fee of about $1 in most States I believe. In effect several kwh per day get donated back to the retailer as a sort of tithe.

I also wonder whether the 50 Hz frequency standard is threatened by too many inverters getting out of sync. Not a problem when rich people get battlers to pay a third of their costs while producing a miniscule 1% of overall grid energy. Somehow the fact no coal stations ever get closed down gets overlooked in all the self congratulation.

Fran, at the moment we guarantee supply by paying people to meet it. We might change this system in the future, but I think we’ll probably stick with it for a while. In South Australia this system meets demand over 99.9% of the time, using a maximum wholesale price of $10 a kilowatt-hour. Or is it $1 a kilowatt-hour? Damn, I’ve dropped a zero in my head and I can feel it rolling around in there. Anyway, as Sam pointed out, if we were willing to pay more, then barring barring accidents and disasters we could meet demand 100% of the time. Our current system results in open cycle gas turbines only being used to meet peak demand as it’s not profitable unless the price of electricity is high, and no one is paid not to generate. (Open cycle gas turbines can be used rarely and still be profitable because their capital costs are so low, starting at something like $300 a kilowatt.)

All else being equal, a higher efficiency is better. But where costs are not equal, people may find it actually saves money to go with the less efficient option. For example, if system A is twice as efficient as system B, but costs 27 billion times as much, people will probably go with system B. This sort of thing happens in all areas of life. I could have bought Slazenger balls the other day, but instead I bought generic ‘Recreation’ brand balls because I was simply better off having more money but low quality balls. Anyway, with a commodity like electricity, if people build energy storage capacity, it will almost certainly be the most profitable type they can legally build. And if they make a mistake and it turns out they they would have made more money with a more efficient system, then they have to suffer that loss and learn from their mistake. Or if they are a big company, they might get a helping hand from average Australians.

Currently South Australia has enough wind capacity to entirely meet the state’s demand if there is a period of both high wind and low demand. At the moment we have the capacity to export any surplus to Victoria, which is a huge electricity sink from our point of view, so wholesale electricity prices don’t drop to zero, but there have been places where low demand and high winds have dropped prices down to zero. If enough wind and solar capacity is built, electricity prices could often drop to zero in Australia.

@Ronald Brak
I sometimes wonder if the casual reader casually accepts all of this without trying to think it through. Spot prices for grid electricity can be zero or negative (ie pay to take away but still get any subsidy) but the cost is always positive. Every lump of tricky hardware has depreciation, finance and staffing costs whether or not it burns fuel. If generators opt to sell cheap or give it away it suggests the subsidy is too generous, which Pr Q will recognise as a form of dissipation of rent.

From what I can gather the AEMO price ceiling is or was $12.50 per kwh and the price floor -$1.00. SA’s high wind penetration is an artefact of the RET , the REC/LGC subsidy which was 3.9c per kwh when I last looked and the fact that wind capacity is fully backed by gas. Therein lies a tiny problem; both SA’s current gas sources are running out fast unless fracking greatly improves reserves. Unless SA can find a way to store energy (giant batteries?) or sell it across the border all those wind mills won’t be much use. Ditto PV when the sun goes down. As an energy model SA is Germany-lite.

And your point is? Last time i looked, Germany still had the lights turned on, and hadn’t gone broke, despite subsidies that everyone agrees were too generous. They are winding back the subsidies now, but they are still planning on installing 3GW of solar per year, as well as lots of wind.

@Hermit
The European experience you cite isn’t relevant to Oz though. In Germany and England, PV doesn’t stabilise the grid. In these places panels are actually a headache. It’s cloudy, and cold, and people don’t demand much energy when the sun is shining. This is totally different to the Australian case.

I don’t say PV in Australia is a perfect load follower; there is some time in the early evening when price is high, but no PV is produced. However, the reverse is true; when PV is operating, the price is almost always high. This means that in Australia, the grid should just about always be happy to accept PV. This still leaves the problem of early evening demand. This can be met two ways. First, only starting up alternative generators during these times (and making it worth their while to lie unused most of the time by paying a premium then). Secondly, demand management. Expose the consumer to the real price, and the problem will largely fix itself.

As an example, imagine a smart airconditioner, that knows the current retail electricity price. It can run full bore in the summer until 4:30 and then switch off, leaving the house nice and cool in the evening without night-time energy use.

There is no doubt Australia – a continent – is more suitable for photovoltaic electricity generation than Germany and England – to geographically ‘small’ countries north of he Alps – combined. But, detail matters. The southern part of Germany is more ‘sunny’ then the north and most of the UK. It is in the south and south-west of Germany where PV panels are anything but a headache. There are programs in place where solar energy is not only harvested from PV panels on the roof but also from the walls of high buildings. Incidentally, it is on very cold days when the skies are often cloudless. The northern and north-eastern parts of Germany are more suitable for wind. Some parts of the south and the north and much of the east are more suitable for biomass (space and agriculture), etc etc. In other words, details matter in conjunction with the portfolio idea of renewable energy.

@Ernestine Gross
OK. But the take home message is that the aussie grid should be much happier to accept rooftop PV than the German one. If the grid were allowed to pay the real price for residential solar here things would look even better than they currently do.

Hermit, the ceiling is getting self conscious about how I keep rolling my eyes towards it. “It’s not you, it’s the internet,” I keep telling it. So in the interest of my domestic harmony I’ve created a short list of points for you to print out and blu-tac to your monitor and check through before you post. Hopefully this will save you lots of time and result in a huge improvement in your productivity.

1. Wind turbines don’t use gas to generate electricity. They still work even if there is no gas.

2. Wind power has reduced the amount of gas and coal used in South Australia.

3. South Australia currently buys gas from Queensland and to a lesser extent from South Austalia. It gets the gas through long pipes. It doesn’t rely on its own gas supplies.

4. Saying that the subsidy on wind is too high while calling for enough nuclear capacity to be built to meet peak demand means I lack self awareness on the issue of subsidies.

This thing about baseload power (emphasis on “thing”) puts me in mind about traveling. Whenever we set off there is the ritual prepack and reprepack, an exercise of narrowing the range of stuff down to maximum allowable limits. Inevitably in the “I cant do without” items there is the hairdrier, which is never used as wherever we go there are wall mounted hairdriers.

As an asset baseload power might well turn out to be as useful as a never used hairdrier.

SA gets gas from the Cooper and Otway Basins both of which had low reserves to production ratios until the fracking craze hit town. Unless fracking increases reserves the talk is of only a decade of reliable gas supply left, see for example here. SA has 1.1 GW of nameplate wind power backed by 3.7 GW of reliable gas fired generation. Only 5% or so of the wind capacity can be relied upon. The idea is that during wind lulls gas fired generation covers the dip in output to meet demand, for example in heat waves when the wind hardly blows. Nor do solar panels help much when it is 40C at 7pm. Without relatively cheap gas SA is screwed. It could happen in just a few years time.

@Hermit To repeat myself, so what? Suppose that a shift to renewables leads to a doubling of electricity prices. The impact on standards of living will be minimal – comparable to a few quarters of negative economic growth. Your examples prove the point – even with an economic crisis (unrelated to energy policy) Germany and Denmark are still rich and will remain so.

Granted, we would all be better off, to the tune of a few per cent of income, if we could burn coal without worrying about CO2, or if nuclear energy was an affordable alternative. But since these things aren’t true, we will have to pay a bit more for energy. End of story.